COMMENTARY on Bolivia, Nicaragua, US, Latin America, Latino Issues, Miami Populism, Populismo, Trump, Evo, Ortega, Maduro, Chavez, and Castro, Globalization, Anti-Globalization, Immigration, World Politics, Culture, The War On Terror, Sports, coming from the slightly warped viewpoint of an American of Bolivian-Nicaraguan origin, raised in Central America.
[B]olinica...You will never make history. You are not revered--only reviled-Props From a Fan!!

Sunday, September 23, 2012

Some see the Chavez regime as a benign entity that shares the oil wealth of the country with the poor for the first time in Venezuelan history. Amazing how some will excuse away authoritarian tendencies or wasteful incompetence with an argument that seems to boil down to what I would call "but..it has its heart in the right place."

Truth of the matter is that the Chavez government has become one of the most corrupt governments in Latin America in recent times. It has also enjoyed a windfall of one trillion dollars in oil revenue, since the price of a barrel of oil has gone from 8 bucks a barrel to 100+ while Chavez is in office. Sure, it claims it has directed 300 billion dollars to social programs, which on paper might be true, but its hard to see where all that money goes. With little oversight or accountability hundreds of billions of dollars are not accounted for, and are prime candidates for corruption by government officials and friendly businessmen.

Which Brings Us To Capital Flight - And Hugo's Big Mouth.

Opposition newspaper Tal Cual, editorial called El Saqueo "The Plunder", by Carlos Diaz, reported on statements President Hugo Chavez on September 11, 2012. President Chavez stated there was more than 400 Billions of Venezuelan dollars in foreign fiscal paradises.

President Hugo Chavez was citing statistics from the Tax Justice Network, an English NGO whose issue is concern with unrecorded, untaxed private wealth being squirreled away in offshore havens. The latest and very publicized TJN report in 2012 was The Price Of Offshore Revisited. by James S. Henry, which used new criteria to measure the amount of untaxed private wealth that has accumulated in offshore tax havens and the largest 50 banks in the world the past 40 years. The reports appendix had statistics on estimated "private Venezuelan funds directed to fiscal paradises during the period 1970-2010.' according to Diaz. TJN measures pre-tax private wealth that flows to tax havens including First World banks.

When Chavez was probably referring to was the sum of 400 Billion dollars which is estimated to be the dollar amount of the value of off-the-books private capital that has fled Venezuela the past 40 years plus what this capital it has earned in returns. Diaz correctly notes that while Chavez uses the data to "demonize" prior governments, the reports findings are especially damning to his government.

Basically, if you look at the report, most of the Capital Flight has been continuous under Chavez. Not only is Chavez off-base, he is damned by the report. He is responsible for 55% of the total capital flight for the period 1970-2010. Venezuela government corruption and economic mismanagement were
notorious before Chavez, and the charts reflect that fact. There was
massive plunder of oil revenues in the 70's, during the 90's bank
crisis' billions left the country, which is what Chavez supporters often point to (correctly). But still during 1999-2010 period, more pre-tax dollars ended up abroad than during the "Venezuelan Saudi" period of the 70's and 80's and the "Neo-Liberal" 90's combined.

In absolute numbers, Venezuela is second to Brazil in Capital Flight, the past 40 years. For the period of Chavez rule Venezuela is #1 in absolute numbers in Unrecorded Capital Outflows. This estimate is $153 Billion Dollars in the time period 2001 to 2010, which coincides with the single largest oil boom in history, with a trillion dollars in revenue. And a good chunk of it can not be explained by anti-Chavez Wealthy Venezuelans pulling money out between 99 and say the PDVSA strike of 2003 - though that did happen. But, unrecorded private capital outflows spiked after oil prices increased after 2005What does this say about corruption?

Venezuelas economy and revenues mostly come from extracting oil, and from the national oil company PDSVA. This capital flight happened under a government with strict
capital and currency controls, and where the government controls a
substantial part of the economy. Private Sector activities in the traditional agricultural and manufacturing sector have suffered, due to government policies of expropriations, price controls and currency controls, That also dries them up as potential sources of capital flight.. The government is flush with cash, and spends a lot of it which ends up being filtered out to a parasitic Private Sector that acts as subcontractors and bankers for the inefficient and wasteful state. The government has also been directly involved by selling billions of dollar denominated bonds at artificially low exchange rates, so private buyers can deposit them in foreign accounts and the government can spend more money to buy votes.

Brazil and Mexico have large and more diversified economies with actual multi-nationals. Together with Argentina, over the past 40 years have well-documented histories of economic collapses and debt. We just need to look at the financial crisis that bookended the 90's in Brazil to find some explanations for capital flight. Mexico went through a horrible crisis in the early 80's, the Tequila crisis in the 90's and this decade has the U.S. Great Recession and drug violence and money laundering.
All 3 of these countries have a long history of government corruption that also explains their capital flight. Mexico under the PRI in the 70's and 80's produced multi-millionaires (Lopez Portillo or Salinas De Gortari anyone?)
Yet in Chavez' Venezuela is a bigger exporter of unreported dollars to private bank accounts than trillion dollar economies like Brazil or Mexico. Private individuals in a revolutionary government, somehow end up exporting billions in capital beating out legendary oil-flush thieveocracies like the PRI of the 70's and their own homegrown ADN/Copei. That says a lot about the rot at the core of Chavez supposed Boliviarian Revolution.

About Me

Bolivian and Nicaraguan parents, born in California. Moved to Nicaragua when I was 7, lived in Nicaragua (twice), El Salvador, Guatemala , Bolivia, Panama, graduated high school Costa Rica. Saw crazy things, had some pretty wacky experiences, met some interesting people in Central and South America in the 70's, 80's and 90's.
Now I live in Miami (original huh?) after a long and cold stint in the American Mid-West.
Blog about stuff that fascinates, obsesses and annoys me here in the US, in Latin America, and everywhere else. In the end I believe in balance; with the need to combine empathy, rationality, historical understanding, humility,respect, imagination, realism, and clear-headed thinking if we want to help others - and ourselves - so we stick around this world for a while. In my experience, people can be really, really nasty, but on the other hand we can be really, really alike in good ways too. Don't care for fundamentalists of all stripes who have all the answers (which of course I do).
As for the rest of 'me', does this look like a damn confessional booth?